Auditor s Report on the Statutory consolidated accounting reports of ОАО Gazprom and its subsidiaries 2013

Transcription

1 Auditor s Report on the Statutory consolidated accounting reports of ОАО Gazprom and its subsidiaries 2013

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5 CONSOLIDATED BALANCE SHEET as of 2013 Note ASSETS I. NON-CURRENT ASSETS Intangible assets, including: 914, , ,874 5 goodwill on subsidiaries 907, , ,290 Results of research and development 6,711 5,728 5,968 6 Intangible exploration assets 106,479 59,841 53,873 6 Tangible exploration assets 77,893 51,449 41,056 Fixed assets, including: 9,131,301 8,522,501 7,857,434 7 Objects of fixed assets, including: 7,511,539 7,120,971 6,160,585 buildings, constructions, machinery and equipment 7,354,415 6,972,686 6,029,193 8 Construction in progress 1,619,762 1,401,530 1,696,849 9, 20 Financial investments, including: 991, , ,888 investments in subsidiaries 115,306 59,982 51,359 investments in associates 566, , ,117 investments in other companies 168, , ,174 loans issued to companies beyond 12 months 110, , ,197 other financial investments 30,039 30,855 34, Deferred tax assets 75, ,668 69,727 Other non-current assets 201, , ,344 TOTAL Section I 11,505,322 10,738,196 10,053,164 II. CURRENT ASSETS 10 Inventories, including: 638, , ,625 raw materials and other inventories 151, , ,381 work in progress 15,541 12,558 8,601 finished goods and goods for resale 460, , ,436 goods dispatched 10,593 12,203 12,207 Value added tax on purchased goods 341, , , Accounts receivable, including: 1,339,174 1,269,286 1,225,352 Accounts receivable (payment expected beyond 12 months of the reporting date), including: 62,389 84, ,205 buyers and customers 16,967 14,569 10,178 advances paid 12,291 25,112 31,818 other accounts receivable 33,131 44,933 74,209 Accounts receivable (payment expected within 12 months of the reporting date), including: 1,276,785 1,184,672 1,109,147 buyers and customers 739, , ,635 advances paid 217, , ,667 other accounts receivable 320, , ,845 Financial investments (less cash equivalents), including: 204, , ,936 loans issued to companies due within 12 months 105,496 97,194 90, other financial investments 99,163 68,499 51, Cash and cash equivalents, including: 699, , ,955 cash on hand rouble bank accounts 442, , ,313 non-rouble bank accounts 134, , ,615 other monetary assets and cash equivalents 122, , ,494 Other current assets 13,421 14,446 9,783 TOTAL Section II 3,237,134 2,791,016 2,646,938 TOTAL ASSETS 14,742,456 13,529,212 12,700,102 5

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10 1. GENERAL INFORMATION OAO Gazprom and its subsidiaries (the Group ) operate one of the largest gas pipeline systems in the world and are responsible for substantially all gas production and high pressure gas transportation in the n Federation. The Group is a major exporter of gas to European countries. The Group is engaged in oil production, refining activities and electricity/heat generation. The Group is involved in the following principal activities: Exploration and production of gas; Transportation of gas; Sales of gas within the n Federation and abroad; Gas storage; Production of crude oil and gas condensate; Processing of oil, gas condensate and other hydrocarbons, and sales of refined products; Electric and heat energy generation and sales. Other financial and operational activities include mainly production of other goods, works and services. On average, the Group employed 422,767 and 406,577 people in 2013 and 2012, respectively. 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION Accounting principles The statutory consolidated accounting reports of the Group have been prepared in accordance with the accounting rules effective in the n Federation, in particular, the Federal Law On Accounting dated 6 December 2011 No. 402-FZ and the Regulation on Accounting and Reporting in the n Federation adopted by Order of the Ministry of Finance of the n Federation dated 29 July 1998 No. 34n, other statutory accounting and reporting regulatory acts included in accounting and reporting regulatory system of organizations in the n Federation and the Methodology recommendations on preparing consolidated accounting reports, approved by Order of the n Ministry of Finance dated 30 December 1996 No Assets and liabilities are accounted for at actual purchase costs, except for fixed assets that are revalued on a regular basis, investments for which fair value is determinable, and other assets against which impairment provisions have been formed in accordance with the applicable accounting rules and regulations. Basis of consolidation In accordance with the Methodology recommendations on preparing consolidated accounting reports, approved by Order of the n Ministry of Finance dated 30 December 1996 No. 112, the Consolidated Balance Sheet, Consolidated Statement of Financial Results, Consolidated Statement of Changes in Shareholder s Equity, Consolidated Statement of Cash Flow and the Notes to the consolidated accounting reports (together, the statutory consolidated accounting reports ) comprise a consolidation of the statutory accounting reports of OAO Gazprom and its principal subsidiaries and associates. Accounting policy for the year 2013 of OAO Gazprom and its subsidiaries is approved by Order No. 424 dated 28 December All significant investments in subsidiary undertakings which exercise a significant influence on the financial position and financial results of the Group have been included in the consolidated accounting reports in compliance with the consolidation Methodology. Investments in companies with 50% interest and more owned by the Group and in case the Group does not exercise control over these companies are accounted for as investments in associates in the Consolidated Balance Sheet. Statutory consolidated accounting reports include investments in associates, acquisition price and financial results of which are stated on the equity basis in these consolidated accounting reports. Assets and liabilities denominated in foreign currency Business transactions denominated in foreign currencies have been recorded using the official Rouble exchange rate determined by Central Bank of n Federation as of the date of the relevant transaction. Cash on currency and deposit accounts, cash on hand, securities (except for shares) and settlement balances, including loans issued and raised (except for advances received and issued, prepayments and down payments) denominated in foreign currency were recorded using the official Rouble exchange rate as at reporting date.the rate of exchange as of 2013 was RR to USD 1 (as of 2012 RR , as of 2011 RR ) and RR to EUR 1 (as of RR , as of 2011 RR ). 10

11 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) Exchange differences resulting from transactions with assets and liabilities denominated in foreign currency during the year, and from their recalculation as of the reporting date, are included in the Consolidated Statement of Financial Results as other income and expenses. Exchange differences arising from the translation of the assets and liabilities of foreign subsidiaries and associates are included into additional capital. Statements of Financial Results of foreign entities are translated at average exchange rate of relevant foreign currency for the year. Current and non-current assets and liabilities In the Consolidated Balance Sheet accounts receivable and accounts payable, including loans and borrowings, are treated as current if the term of their circulation (maturity) does not exceed 12 months after the reporting date or is not specified. All other assets and liabilities are treated as non-current. Investments are classified as current or non-current based on the estimated period of use (circulation, posession or maturity) after the reporting date. Goodwill of subsidiaries In the consolidated accounting reports goodwill arising on the acquisition of subsidiary undertakings represents the positive difference between the historic cost of acquired investments in subsidiaries and the nominal value of their shares at the date of acquisition. Goodwill is amortized on a straight-line basis over 20 years starting from the month following the month of acquisition. Amortization charge of goodwill for the period is represented within other expenses in the Consolidated Statement of Financial Results. Results of research and development Results of research and development in the Consolidated Balance Sheet include expenditure on completed research and development, which met recognition criteria, which are not subject to legal protection under the existing laws and are used for production or managerial needs of the Group. These expenses are written off to cost of production of goods and services throughout the year from the moment they were first used on a straightline basis. Expenditure on acquisition and development of research and development in progress, which are accounted within other non-current assets, are also included into this line. Intangible and tangible exploration assets Exploration costs accounted within tangible exploration assets include: expenditure on drilling and infrastructure development of prospecting, exploration and advance development wells (drilled at the exploration stage before the commercial practicability of minerals extraction is proved) broken down by fields (areas); acquisition and set-up costs of property, constructions, plant, equipment, vehicles used for prospecting, valuation of minerals fields and minerals exploration. Tangible exploration assets include wells, property, plant, equipment, constructions, sets, vehicles, metalwork, special gear and tools. Exploration costs accounted within intangible exploration assets include expenditure on acquisition of the rights to use subsurface resources. Intangible exploration assets include geological exploration and mining licences. Minerals prospecting and exploration licences are amortized on a straight-line basis during the period of the validity of the licenses. Combined licences with rights on minerals prospecting, exploration and extraction are not amortised till the commercial practicability of minerals extraction is proved. Equipment acquisition costs are depreciated on a straight-line basis during the period of their useful life. Depreciation charges are attributed to cost of geological exploration of an associated field. The Group determines useful lifes of exploration assets similarly to determination of fixed assets useful lifes. The cost of a self-developed exploration asset includes depreciation charge of the exploration asset used to develop this exploration asset. In case the commercial practicability of minerals extraction in a particular area of the filed is proved the exploration assets are tested for impairment and transferred to fixed assets, intangible assets or other non-current assets, which are intended for mining and extraction of minerals. The Group tests exploration assets for impairment as of of the reporting year and in case the commercial practicability of minerals extraction in a particular area of a field is proved. 11

12 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) Fixed assets Fixed assets include assets which conform to the requirements of the n accounting rule Accounting for Fixed Assets (RAR 6/01) approved by Order of the n Ministry of Finance dated 30 March 2001, No. 26n, accounted for in accordance with the established procedure. Completed fixed assets, which have been put into operation but documents for the state registration of title for which have not been submitted to the State Register are accounted separately within fixed assets. In the consolidated accounting reports fixed assets are recorded at replacement cost (as of 2013) net of depreciation accumulated for the period of their use. Certain assets of the certain entities of the Group (including Gazprom neft Group entities, OAO WGC-2, OAO TGС-1) are reported at historical cost net of depreciation accumulated for the period of their use. The management of OAO Gazprom does not belive that this has a material impact on the consolidated accounting reports. Fixed assets recorded on the subsidiaries balance sheets include state social assets. The Group s companies received these assets without title transfer, in the course of restructuring of the unified gas supply system and assets of the state gas concern Gazprom. These assets were accounted for in accordance with the procedures effective at that period by creating the fund of social assets in the amount equal to their net book value. When the subsidiaries were restructured to the subsidiary undertakings of the Group these assets jointly with the fund of social assets were transferred to the Group s companies. When these assets are transferred to the municipal authorities (or disposed otherwise) their net book value is charged to the above mentioned fund recorded in line Social government fund of the Consolidated Balance Sheet. Although this practice represents a deviation from the established procedure, Management of OAO Gazprom believes that it ensures fair presentation of the Group s property relations as the assets are used according to their functional purposes and the Group is held liable for their maintenance and safety. Fixed assets accounted before 1 January 2002 are depreciated based on uniform depreciation rates approved by Decree of the USSR Council of Ministers dated 22 October 1990, No On Uniform Depreciation Rates of Fixed Assets of the USSR National Economy. Fixed assets acquired after 1 January 2002 are depreciated at rates based on estimated useful lives of these assets. Classification of fixed assets by depreciation groups approved by Government Resolution of the n Federation No.1 dated 1 January 2002, is used as one of the sources of information about useful lives of fixed assets. The Group has adopted the following useful lives for fixed asset groups: Useful lives of assets recorded on the balance sheet (number of years) before 1 January 2002 after 1 January 2002 Trunk pipelines Wells Machinery and equipment Buildings and roads Social assets All fixed assets are depreciated on a straight-line basis. The following assets are not depreciated: land; suspended assets (above 3 months); state social assets; fully depreciated assets that are still on the balance sheet; housing assets commissioned prior to 1 January 2006 (similar assets acquired after 1 January 2006 are depreciated in accordance with the general procedure), public amenities and other similar assets. 12

13 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) Investments in non-current assets Investments in non-current assets include projects under construction which are not put into operation, equipment requiring assembly and other investments in non-current assets not accounted within fixed and intangible assets. Equipment requiring assembly which is in storage and which is meant for projects under construction is accounted within construction in progress separately. Depending on how these assets will be accounted for after the investments into non-current assets are completed the items stated above are represented in lines Intangible assets, Results of research and development, Intangible exploration assets, Tangible exploration assets, or Construction in progress. Financial investments Investments are recorded at their historical cost (actual acquisition costs) except for investments for which market value is determinable and investments for which impairment provision is created. Investments for which market value is determinable are restated to their market value as of the end of the reporting year. The change in the investment value at the reporting date and the date of previous valuation is recorded in other income and expenses. Investments for which market value is non-determinable and there are indications as of the reporting date that the decline in their value is significant and constant are recorded on the Consolidated Balance Sheet as of the end of the reporting year at their carrying (book) value net of impairment provision. The investment impairment provision is determined annually based on the stock taking results as of. While determining the provision, the Group calculated the estimated value of investments, showing significant steady decline, based on available information and created the investment impairment provision in the amount by which the carrying value of investments exceeded their estimated value. Changes in provision introduced based on stock-taking results as of are posted to other expenses and income. Securities which do not have market value (except for those individually identifiable, including promissory notes and certificates of deposit) are recorded by types in the statutory accounting reports upon disposal under the first in, first out (FIFO) method. Other investments (including individually identifiable securities such as promissory notes and certificates of deposit) for which the market value is not determinable are recorded upon disposal at the historical cost of each unit. Income and expenses related to investments are included within other income and expenses. Inventories and costs Raw materials are recognized at their actual cost of purchase or production. Dispatch into production or other disposals of inventories are recorded using the average cost method. Oil and gas produced and purchased but unsold and retained in storages and pipelines as of the end of the reporting period are reported in line Finished goods and goods for resale of the Consolidated Balance Sheet. Disposals of finished goods and goods for resale are recorded using the average cost method. Transportation costs related to the transportation of natural gas on the territory of and abroad are allocated between volumes of gas sold and gas in pipelines and storage as of the end of the reporting period. Transit costs for gas, oil and refined products are shown as Cost of sales of the Consolidated Statement of Financial Results. Impairment provision is created for raw materials and other inventories used in production, works and services, if current market value of those goods, works and services is less than their actual cost as of reporting date. Work in progress is carried at actual cost of production less general administrative expenses. Finished goods are carried at the simplified actual cost of production less general administrative expenses. Accounts receivable Trade receivables are recorded based on prices contracted between the Group and buyers (customers) taking account of all discounts (markups) provided by the Group. Bad debts are written off when recognized as such. Doubtful accounts receivable with high probability of nonredemption are represented net of bad debt provision. Bad debt provision is recorded within other expenses in the Consolidated Statement of Financial Results. Corresponding amount of provision is recorded in other income (recognized as bad debt) upon repayment of doubtful receivables. 13

14 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) Cash equivalents and representation of cash flows in the Consolidated Statement of Cash Flow Cash equivalents include most liquid financial investments, which are easily convertible into a known amount of cash and are not subject to risk of change in price. The Group classifies short-term bank deposits with maturity up to 3 months as cash equivalents and represents them in the line Cash and cash equivalents in the Consolidated Balance Sheet. Cash flows of the Group which are not clearly identified as cash flows from operating, investment or financial activities are represented within operating activities in the Consolidated Statement of Cash Flow. Such cash flows include tax payments and reimbursement of indirect tax from the state budget. For cash flow statement purposes cash flows denominated in foreign currency are recalculated using the official Rouble exchange rate set by the Central bank of the n Federation as at the date of transaction. Forex effect, arising from recalculation of cash flows and closing balances of cash and cash equivalents denominated in foreign currency using exchange rates as at date of transaction and reporting date, is included into the line Impact of changes in Exchange rates in the Consolidated Statement of Cash Flows. In the Consolidated Statements of Cash Flows the following cash flows are netted: cash outflow and cash inflow arising from foreign exchange operations; settlements with commissioner or agent in relation to rendering services (except for commission itself); cash flows with high turnover, large amounts and short pay-back period; other settlements that relate rather to the activity of counterparties than to the activity of the Group itself. In the context of recent revision of composition of Consolidated Statement of Cash Flow, initiated by n accounting rule «Cash flow statement» (RAR 23/2011), adopted by the Order of the Ministry of Finance dated 2 February 2011 No.11n, indirect taxes within settlements with suppliers and contractors and settlements with debtors are netted. Loans and borrowings received Interest on credits and loans received and additional costs attributable to the receipt of credits and loans are included in other expenses in the reporting period, in which they are incurred. OAO Gazprom is the Group's main credit raiser. The majority of the finance acquired are general purpose loans and borrowings which are passed on to subsidiaries under investment agreements (the subsidiaries are acting as developers). Due to investment process specifics and following the principle of rational accounting the Group does not calculate any loan interest on non-investment activities for inclusion in the cost of investment assets. The Group accounts for loans or credits payable in the amounts actually received. Commitments and contingencies The Group recognizes the following contingent liabilities in accounting: bonus payments at the year end; vacations; retirement benefits payable as a lump sum; fixed assets liquidation and environmental restoration in the context of subsurface use; other contingent liabilities. The amount of contingent liabilities for bonus payments at the year end is defined based on the stock-taking results and adopted procedure for accrual of bonus payments at the year end. The amount of contingent liabilities for vacations is defined based on the quantity of days of annual and excess leave earned but not used by employees during the whole period of employment as at reporting date and the average daily salary. It is revised at reporting date. Contingent liabilities for retirement benefits payable as a lump sum are accrued at the date when an employee becomes of pensionable age and are written off 6 months after this date. The Group recognized contingent liabilities for gas price adjustment arising from the claims of European customers based on the contracts terms. The effect of gas price adjustment including corresponding impacts on profit tax are recorded when they become probable and a reliable estimate of the amounts can be made. 14

15 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued) Contingent liabilities are attributed to general expenses and to other expenses in the Consolidated Statement of Financial Results. Contingent liabilities for fixed assets liquidation and environmental restoration in the context of subsurface use are recognized within fixed assets value. Increase or decrease of the amount of contingent liability due to change of its value is attributed to other income and other expenses. Contingent liabilities are represented in the line Commitments and contingencies in the Consolidated Balance Sheet. Deferred taxes For the purposes of consolidated accounting reports the Group recognizes non-temporary tax assets and nontemporary tax liabilities, deferred tax assets and deferred tax liabilities, i.e. amounts that can affect current profit tax expenses in the current or future reporting periods. Information about non-temporary and temporary differences is based on the supporting documents. Current profit tax is determined based on theoretical expense (theoretical income) related to profit tax, non-temporary tax assets and liabilities, deferred tax assets and liabilities for accounting purposes. The amount corresponds to current tax according to profit tax return. On the Consolidated Balance Sheet deferred tax assets and deferred tax liabilities are recorded within non-current assets or non-current liabilities on a gross-up basis. Revenue and other income recognition Revenues from sales of goods and services rendering are recognized at the moment when goods are shipped (or services rendered) and corresponding settlement documents are submitted to customers. In the consolidated accounting reports revenues are presented net of value added tax, customs duties and other similar mandatory payments. Other income primarily include transactions related to the sale of foreign currency, positive exchange differences arising from foreign currency transactions, income from trading operations without actual delivery. Expenses recognition General expenses are those related to production, rendering of work and services, sales of goods. Administrative expenses are general business expenses which are monthly written off to Cost of sales of the reporting period in full amount. Other expenses primarily include expenses related to the sale and purchase of foreign currency, negative exchange differences arising from foreign currency transactions, expenses associated with trading operations without actual delivery. In the Consolidated Statement of Financial Results other expenses are represented netted in relation to relevant income, if this is directly prescribed or is not prohibited by the accounting regulation and if expenses and related income resulted from the same or similar economic event are not material for financial characteristics of the entity of the Group. 15

16 3. CHANGES IN THE ACCOUNTING POLICIES AND COMPARATIVE INFORMATION FOR THE PREVIOUS REPORTING PERIODS Changes in the 2013 accounting policies There were no significant changes in the 2013 accounting policies. Changes in the 2014 accounting policies There were no significant changes in the 2014 accounting policies. Changes in the comparative periods Columns 2012 and 2011 of the Consolidated Balance Sheet as of 2013 were formed by the way of adjusting closing balances of the Consolidated Balance Sheet as of 2012 and 2011 due to the following: - Expenditure on acquisition of minerals prospecting, exploration and extraction licences in the areas of minerals fields in respect of which the commercial practicability of minerals extraction has not yet been proved are presented within intangible exploration assets and are represented in the line Intangible exploration assets of the Consolidated Balance Sheet and are not amortized, before 1 January 2013 these expenses were represented in the line Other non-current assets and were amortized on a straight-line basis during the period of the validity of the licenses). - Expenditure on drilling and infrastructure development of prospecting and exploration wells drilled at the exploration stage in the areas of minerals fields in respect of which the commercial practicability of minerals extraction has not yet been proved are represented in the line Tangible exploration assets of the Consolidated Balance Sheet, before 1 January 2013 these expenses were represented in lines Construction in progress of the Consolidated Balance Sheet. Adjustments to the amounts as at 2012 and 2011 in the Consolidated Balance Sheet as at 2013 Item Amount before adjustment Adjust Adjust ment ment Amount after adjustment Amount before adjustment Amount after adjustment I. NON-CURRENT ASSETS Intangible exploration assets 69,403 (9,562) 59,841 52,703 1,170 53,873 Tangible exploration assets 37,182 14,267 51,449 29,673 11,383 41,056 Fixed assets, including: 8,528,751 (6,250) 8,522,501 7,868,817 (11,383) 7,857,434 Objects of fixed assets, including: 7,120,971-7,120,971 6,160,585-6,160,585 buildings, constructions, machinery and equipment 6,972,686-6,972,686 6,029,193-6,029,193 Construction in progress 1,407,780 (6,250) 1,401,530 1,708,232 (11,383) 1,696,849 Other non-current assets 193,700 3, , ,417 9, ,344 TOTAL Section I 10,736,470 1,726 10,738,196 10,042,067 11,097 10,053,164 II. CURRENT ASSETS Value added tax on purchased goods 394,310 10, , , ,287 Accounts receivable, including: 1,281,274 (11,988) 1,269,286 1,236,449 (11,097) 1,225,352 Accounts receivable (payment expected beyond 12 months of the reporting date), including: 84,614-84, , ,205 Accounts receivable (payment expected within 12 months of the reporting date), including: 1,196,660 (11,988) 1,184,672 1,120,244 (11,097) 1,109,147 advances paid 340,339 (11,988) 328, ,764 (11,097) 277,667 TOTAL Section II 2,792,742 (1,726) 2,791,016 2,658,035 (11,097) 2,646,938 16

17 3. CHANGES IN THE ACCOUNTING POLICIES AND COMPARATIVE INFORMATION FOR THE PREVIOUS REPORTING PERIODS (continued) Adjustments to the Consolidated Statement of Cash Flow To ensure comparability of the data for 2013 to comparative amounts for 2012 in the Consolidated Statement of Cash Flow amounts for 2012 were adjusted for the changes of presentation of cash inflows and outflows, including: - Lease payments and indirect taxes included in lease payments are represented within cash flows from financial activities; previously such payments were represented within cash flows from operating activities. - Payments to suppliers and contractors related to development and acquisition of exploration assets are represented within Cash flows from investment. Item Amount before adjustment for 2012 Adjustment Amount after adjustment for 2012 Cash flows from operating activities Total cash received 5,782,761-5,782,761 Total cash paid (4,432,416) 7,959 (4,424,457) Net cash provided by operating activities 1,350,345 7,959 1,358,304 Cash flows from investing activities Total cash received 328,781 5, ,575 Total cash paid (1,487,457) (9,475) (1,496,932) Net cash used for investing activities (1,158,676) (3,681) (1,162,357) Cash flows from financial activities Total cash received 404, ,786 Total cash paid (664,934) (4,278) (669,212) Net cash provided by financial activities (260,148) (4,278) (264,426) 17

18 4. SEGMENT INFORMATION The Group operates as a vertically integrated business with substantially all external gas sales generated by the Distribution segment. The Board of Directors and Management Committee of OAO Gazprom (chief operating decision maker (CODM)) provide general management of the Group, an assessment of the operating results and allocate resources using different internal financial information. Based on that the following reportable segments within the Group were determined: Production of gas - geologic exploration and production of gas; Transportation - transportation of gas; Distribution of gas - sales of gas on internal and external markets; Gas storage - storage of extracted and purchased gas in underground gas storages; Production of crude oi - exploration and production of oil and gas condensate, sales of crude oil and gas condensate and gas condensate; Refining - processing of oil, gas condensate and other hydrocarbons, and sales of refined products; Electric and heat - electric and heat energy generation and sales; energy generation and sales Other - other activities. The inter-segment sales mainly consist of: Production of gas - sales of gas to the Distribution of gas and Refining segments; Transportation - rendering transportation services to the Distribution of gas segment; Distribution of gas - sales of gas to the Transportation segment for own needs and to the Electric and heat energy generation and sales segment; Gas storage - sales of gas storage services to Distribution of gas segment; Production of crude oi - sales of oil and gas condensate to the Refining segment for further and gas condensate processing; Refining - sales of refined hydrocarbon products to other segments. Internal transfer prices, mostly for Production of gas, Transportation and Gas storage segments, are established by the management of the Group with the objective of providing specific funding requirements of the individual subsidiaries within each segment. Prices are determined based on principle cost plus normal profit. The CODM assesses the performance, assets and liabilities of the operating segments based on the internal financial reporting. Segment revenues (income) of the Group are generated from transactions with customers. Profit tax expense and other similar mandatory payments, interest income and expense, income from investments in other companies are not included in the segment profit (loss). Other income and expenses are not allocated by segments because it is deemed impracticable and as the required allocation base is not available. 18

19 4. SEGMENT INFORMATION (continued) Production of gas Transportation Distribution of gas Gas storage Production of crude oil and gas condensate Refining Electric and heat energy generation and sales All other segments For 2013 Total segment revenues 662, ,595 3,123,217 37, ,457 1,361, , ,740 7,382,838 Inter-segment sales 653, , ,053 35, ,531 10, ,135,538 External sales 8, ,942 2,876,164 1, ,926 1,350, , ,740 5,247,300 Segment result 81,416 31,966 1,031,918 5,172 94, ,221 32,763 10,113 1,433,153 Depreciation 132, ,686 14,228 15,206 74,673 33,706 31,895 15, ,185 Capitalized profit of associates 852 7,755 12, ,631 2,116-1,311 93,481 For 2012 Total segment revenues 553, ,320 3,021,485 33, ,707 1,201, , ,764 6,933,522 Inter-segment sales 544, , ,430 32, ,724 9, ,930,620 External sales 9,126 90,886 2,786,055 1, ,983 1,192, , ,764 5,002,902 Segment result 56,931 34, ,793 5, , ,447 24,613 3,226 1,360,266 Depreciation 111, ,720 10,504 13,427 58,225 29,070 21,468 13, ,734 Capitalized profit (loss) of associates 1,032 (814) 35,551 (165) 98,287 2,382-15, ,705 Total A reconciliation of total operating segment results to total profit before profit tax in the Consolidated Statement of Financial Results is provided as follows: For 2013 For 2012 Segment result 1,433,153 1,360,266 Income from investments in other companies 4,750 7,994 Interest income 34,170 27,805 Interest expense (88,756) (88,524) 19 Other income 5,656,376 5,553, Other expense (5,950,244) (5,954,755) Difference in depreciation (3,270) (3,662) 9 Capitalized profit (loss) of associates 93, ,705 Profit before profit tax 1,179,660 1,054,366 Segment assets include primarily tangible and intangible exploration assets, fixed assets, construction in progress, inventory, work in progress, accounts receivable and other non-current assets. Investments into unconsolidated subsidiaries, associates, equity investments and joint activity are allocated to the reporting segments on the basis of primary activity of these entities. Goodwill, deferred tax assets, value added tax, cash and cash equivalents, other financial investments, as well as loans issues to other entities are not included in segment assets as they are not directly related to the reporting segments and the required allocation base is not available. Inter-segment operations represent the balance of intercompany transactions. Segment capital expenditures include capital investments in fixed assets of the corresponding periods. 19

20 4. SEGMENT INFORMATION (continued) Production of gas Transportation Distribution of gas Gas storage Production of crude oil and gas condensate Electric and heat energy generation and sales All other segments Refining Total 2013 Segment assets 2,194,752 5,265,289 1,405, ,631 1,204,678 1,001, , ,932 12,785,190 Investments in associated undertakings 31,032 93,325 76,484 6, ,691 12, , ,722 Capital expenditure 190, ,543 36,085 23, , ,362 71, ,513 1,103, Segment assets 1,996,958 5,262,632 1,245, ,928 1,019, , , ,676 11,800,533 Investments in associated undertakings 27,698 67,550 85,731 4, ,407 8, , ,289 Capital expenditure 232, ,822 47,166 18,247 85, ,529 52,002 61,470 1,189, Segment assets 1,906,130 4,955,286 1,242, , , , , ,129 11,228,204 Investments in associated undertakings 27,914 66, , ,252 47, , ,117 Capital expenditure 246, ,910 48,802 19,978 72, ,267 67,181 29,700 1,336,913 Note Reportable segments assets are reconciled to total assets in the Consolidated Balance Sheet as follows: Segment assets for reportable segments 12,030,258 11,144,857 10,685,075 Other segments assets 754, , ,129 Total segment assets 12,785,190 11,800,533 11,228,204 5 Goodwill 907, , ,290 Loans issued to companies beyond 12 months 110, , ,197 Other long-term financial investments 30,039 30,855 34,041 Deferred tax assets 75, ,668 69,727 Value added tax on purchased goods 341, , ,287 Loans issued to companies due within 12 months 105,496 97,194 90,994 Other short-term financial investments 99,163 68,499 51,942 Cash and cash equivalents 699, , ,955 Decommissioning costs 57,414 52,111 51,452 Inter-segment assets (673,902) (647,567) (801,796) Other 204, , ,809 Total assets per the balance sheet 14,742,456 13,529,212 12,700,102 Segment liabilities include primarily short-term liabilities except for profit tax and other taxes payable to the budget for which there is no basis for allocation and loans and borrowings received to finance the Group operations. Production of gas Transportation Distribution of gas Gas storage Production of crude oil and gas condensate Electric and heat energy generation and sales All other segments Refining Total 2013 Segment liabilities 155, , ,433 9, , ,666 46, ,989 1,639, Segment liabilities 135, , ,171 9, , ,356 29, ,500 1,729, Segment liabilities 115, , ,773 7, , ,963 35, ,010 1,614,167 20

21 4. SEGMENT INFORMATION (continued) Note Reportable segments liabilities are reconciled to total liabilities in the Consolidated Balance Sheet as follows: Segment liabilities for reportable segments 1,514,325 1,582,574 1,477,157 Other segments liabilities 124, , ,010 Total segments liabilities 1,639,314 1,729,074 1,614, Long-term loans and borrowings 1,480,903 1,178,381 1,173,207 Deferred tax liabilities 363, , , Short-term loans and borrowings and current portion of long-term loans and borrowings 330, , ,037 Dividends payable 3,791 1,779 1,888 Income of future periods 2,551 2,362 3, Contingent liabilities regarding fixed assets liquidation and environmental restoration in the context of subsurface use 116, , ,890 Inter-segment liabilities (673,902) (647,567) (801,796) Other 148,616 90, ,910 Total liabilities per the balance sheet 3,412,003 3,067,918 2,823,165 Information on sales by geographical segments is presented in Note 17. Information on assets by geographical segments is not disclosed as assets of the Group are mainly located on the territory of the n Federation. Cash flows from operating, investing and financial activities for reporting segments are represented in the table below: Production of gas Transportation Distribution of gas Gas storage Production of crude oil and gas condensate Refining Electric and heat energy generation and sales All other segments For 2013 Cash flows from operating activities Total cash received 7, ,556 3,446,632 1, ,996 1,534, , ,843 5,937,617 Unallocated cash flows 224,364 Total cash paid (443,992) (466,447) (1,334,655) (13,551) (669,570) (829,004) (251,000) (135,992) (4,144,211) Unallocated cash flows (351,806) Cash flows from investing activities Total cash received 99 1, , ,896 22,570 Unallocated cash flows 232,622 Total cash paid (268,874) (432,933) (50,039) (15,568) (154,503) (106,451) (58,097) (88,767) (1,175,232) Unallocated cash flows (456,866) Cash flows from financial activities Total cash received Unallocated cash flows 568,734 Total cash paid (2,644) (7,601) (3,377) (67) (87) (2,552) (257) (1,083) (17,668) Unallocated cash flows (600,658) For 2012 Cash flows from operating activities Total cash received 7, ,084 3,256,636 1, ,811 1,353, , ,855 5,680,060 Unallocated cash flows 102,701 Total cash paid (401,415) (541,854) (1,225,021) (14,372) (686,085) (764,912) (216,834) (146,428) (3,996,921) Unallocated cash flows (427,536) Cash flows from investing activities Total cash received 220 1, , ,693 11,209 Unallocated cash flows 323,366 Total cash paid (212,679) (514,915) (38,766) (24,742) (106,127) (114,877) (47,578) (76,119) (1,135,803) Unallocated cash flows (361,129) Cash flows from financial activities Total cash received Unallocated cash flows 404,786 Total cash paid (1,913) (7,662) (4,012) (61) (119) (3,461) (225) (1,077) (18,530) Unallocated cash flows (650,682) Total 21

22 5. GOODWILL ON SUBSIDIARIES Note Gross book value Accumulated amortization Net book value 2012 ОАО Gazprom neft 539,720 (169,951) 369,769 ОАО Gazprom transgaz Belarus 146,316 (7,316) 139,000 Sibir Energy Ltd. 103,974 (17,348) 86,626 OAO WGC-2 87,263 (19,804) 67,459 ОАО Gazprom neftekhim Salavat 68,724 (1,829) 66,895 OAО Mosenergo 46,612 (12,653) 33,959 OOO Gazprom neft shelf 37,416 (14,565) 22,851 OAO TGC-1 35,518 (5,328) 30,190 OAO Sibirskie gazovie seti 17,000 (71) 16,929 OAO Gazpromneft MNPZ 15,898 (1,801) 14,097 OAO Daltransgaz 6,990 (1,280) 5,710 ОАО Yuzhuralneftegaz 6,815 (369) 6,446 OAO Gazovie Magistraly Tumeny* 6,285 (785) 5,500 Others 25,373 (5,132) 20,241 Total 1,143,904 (258,232) 885,672 Additions for OAO Moscow Integrated Power Company (OAO MIPC) 69,957-69, ОАО Gazprom neftekhim Salavat 2,158-2,158 OAO Gazpromneft-MNPZ Sibir Energy Ltd OAO Gazprom gazoraspredelenie Sever* Others 11,715 (1,119) 10,596 Total 84,343 (1,119) 83,224 Disposals for 2013 Sibir Energy Ltd. (235) 11 (224) Others (3,694) 625 (3,069) Total (3,929) 636 (3,293) 2 Amortization charge ОАО Gazprom neft (26,986) ОАО Gazprom transgaz Belarus (7,316) Sibir Energy Ltd. (5,189) OAO WGC-2 (4,363) ОАО Gazprom neftekhim Salavat (3,490) OAО Mosenergo (2,331) OOO Gazprom neft shelf (1,870) OAO TGC-1 (1,776) OAO MIPC (873) OAO Sibirskie gazovie seti (852) OAO Gazpromneft MNPZ (802) OAO Daltransgaz (350) ОАО Yuzhuralneftegaz (341) OAO Gazprom gazoraspredelenie Sever* (159) OAO Gazovie Magistraly Tumeny* (157) Others (1,663) Total (58,518) 2013 ОАО Gazprom neft 539,720 (196,937) 342,783 ОАО Gazprom transgaz Belarus 146,316 (14,632) 131,684 Sibir Energy Ltd. 103,973 (22,526) 81,447 OAO WGC-2 87,263 (24,167) 63,096 ОАО Gazprom neftekhim Salavat 70,882 (5,319) 65,563 OAO MIPC 69,957 (873) 69,084 22

23 5. GOODWILL ON SUBSIDIARIES (continued) Gross book value Accumulated amortization Net book value OAО Mosenergo 46,612 (14,984) 31,628 OOO Gazprom neft shelf 37,416 (16,435) 20,981 OAO TGC-1 35,518 (7,104) 28,414 OAO Sibirskie gazovie seti 17,000 (923) 16,077 OAO Gazpromneft MNPZ 16,148 (2,603) 13,545 OAO Daltransgaz 6,990 (1,630) 5,360 ОАО Yuzhuralneftegaz 6,815 (710) 6,105 OAO Gazprom gazoraspredelenie Sever* 6,314 (1,101) 5,213 Others 33,394 (7,289) 26,105 Total 1,224,318 (317,233) 907,085 * In November 2012 the sole participant of OAO Gazovie Magistraly Tumeny took a decision to reorganize OAO Gazovie Magistraly Tumeny in the form of a merger with OAO Tyumenmezhraygaz. In June 2013 the reorganization was completed, all assets and liabilities of OAO Gazovie Magistraly Tumeny were transferred to ОАО Tyumenmezhraygaz. As a result of this transaction, the Group's share in ОАО Tyumenmezhraygaz comprises 90.7%. In July 2013 ОАО Tyumenmezhraygaz was renamed to OAO Gazprom gazoraspredelenie Sever. 6. EXPLORATION ASSETS 2012 additions Changes for 2013 intradisposals group depreciation charge 2013 Total Intangible exploration assets, 59,841 50,089 (3,451) ,479 including: Licences on minerals prospecting, - estimation, exploration and extraction 55,261 2,427 (2,433) 41,807 97,062 Expenditure on obtaining rights on subsurface use, expenditure on geological - knowledge 4,580 47,662 (1,018) (41,807) 9,417 Total Tangible exploration assets, 51,449 28,703 (2,259) ,893 including: Wells 2, (262) 391-2,348 Exploration expenses classified as tangible - exploration assets 49,253 28,680 (1,997) (391) 75, additions Changes for 2012 intradisposals group depreciation charge 2012 Total Intangible exploration assets, 53,873 7,716 (1,748) ,841 including: Licences on minerals prospecting, - estimation, exploration and extraction 50,670 4,641 (1,318) 1,268 55,261 Expenditure on obtaining rights on subsurface use, expenditure on geological - knowledge 3,203 3,075 (430) (1,268) 4,580 Total Tangible exploration assets, 41,056 12,343 (1,950) ,449 including: Wells 1, ,196 Exploration expenses classified as tangible exploration assets 39,057 12,343 (1,950) (197) - 49,253 23

24 Note 7. FIXED ASSETS ОАО GAZPROM Trunk pipelines Machinery and equipment Buildings and roads Other Total Wells 2011 Historical (replacement) cost 9,119,311 1,594,616 2,287,760 1,482,531 1,774,307 16,258,525 Accumulated depreciation (6,213,593) (1,061,027) (1,623,438) (518,957) (680,925) (10,097,940) Net book value 2,905, , , ,574 1,093,382 6,160,585 For 2012 Additions 588, , , , ,032 1,545,335 Disposals (88) (115) (2,886) (8,155) (5,390) (16,634) Historical (replacement) cost (3,880) (8,136) (17,461) (11,580) (11,624) (52,681) Accumulated depreciation 3,792 8,021 14,575 3,425 6,234 36,047 4 Depreciation (251,516) (73,718) (132,036) (46,744) (85,383) (589,397) Revaluation of fixed assets 1, ,303 4,976 8,502 21,082 Historical (replacement) cost 1,629 2,310 25,603 8,993 15,234 53,769 Accumulated depreciation (371) (2,267) (19,300) (4,017) (6,732) (32,687) 2012 Historical (replacement) cost 9,701,580 1,688,677 2,667,113 1,618,022 2,136,862 17,812,254 Accumulated depreciation (6,457,541) (1,125,194) (1,770,340) (566,489) (771,719) (10,691,283) Net book value 3,244, , ,773 1,051,533 1,365,143 7,120,971 For 2013 Additions 94, , , , ,207 1,072,099 Disposals (70) (450) (2,078) (5,260) (5,890) (13,748) Historical (replacement) cost (644) (7,007) (16,077) (7,937) (12,230) (43,895) Accumulated depreciation 574 6,557 13,999 2,677 6,340 30,147 4 Depreciation (268,159) (85,771) (166,951) (52,893) (112,680) (686,454) Revaluation of fixed assets ,844 9,675 6,216 18,671 Historical (replacement) cost (1,100) 57,350 8,494 20,568 16, ,619 Accumulated depreciation 1,695 (57,009) (6,650) (10,893) (10,091) (82,948) 2013 Historical (replacement) cost 9,794,022 1,891,789 2,965,778 1,779,721 2,579,956 19,011,266 Accumulated depreciation (6,722,961) (1,266,392) (1,960,598) (631,816) (917,960) (11,499,727) Net book value 3,071, ,397 1,005,180 1,147,905 1,661,996 7,511,539 In Additions for 2013 reflected acquisition of OAO MIPC, including historical (replacement) cost in the amount of RR 162,173 and accumulated depreciation in amount of RR 49,722. In 2013 and 2012 the Group entities continued to transfer social assets which were obtained in the course of privatization to local authorities (see Note 2). The transferred assets which were obtained in the course of privatization amounted to RR 109 in 2013 (in 2012 RR 0). 8. CONSTRUCTION IN PROGRESS Construction in progress Equipment for installation Total ,472, ,346 1,696,849 For 2012 Capital expenditures 1,047, ,238 1,236,890 Transfer of equipment for installation 205,880 (205,880) - Transfer to Fixed assets (1,511,474) - (1,511,474) Other disposals (incl. write-off) (15,240) (5,495) (20,735) ,199, ,209 1,401,530 24

25 8. CONSTRUCTION IN PROGRESS (continued) Construction in progress Equipment for installation Total For 2013 Capital expenditures 963, ,274 1,133,755 Transfer of equipment for installation 180,133 (180,133) - Transfer to Fixed assets (894,052) - (894,052) Other disposals (incl. write-off) (18,326) (3,145) (21,471) ,430, ,205 1,619,762 Construction in progress mostly consists of construction of transport infrastructure, including the implementation of projects on construction of the gas pipeline Bovanenkovo Ukhta, construction of gas chemical complex (Novourengoysky GCC), as well as development of Bovanenkovskoye field. 9. FINANCIAL INVESTMENTS Long-term financial assets Investments in subsidiaries Investments in subsidiaries in the Consolidated Balance Sheet are stated net of impairment provision in the amount of RR 6,993, RR 6,063 and RR 5,595 as of 2013, 2012 and 2011, respectively. The impairment provision primarily relates to non-core investments. Investments in associates Carrying value Capitalized profit (loss) 31 December 31 December 31 December Note For 2013 For OAO Tomskneft VNK and its subsidiaries 88,560 85,414 83,329 8,359 6, OAO NGK Slavneft and its subsidiaries 84,274 78,093 73,114 9,537 11, OAO Gazprombank 73,946 76,067 57, ,027 21,25 Sakhalin Energy Investment Company Ltd. 52,925 73, ,706 43,085 70,777 21,25 Nord Stream AG 43,851 35,870 36,692 7,433 (2,593) 21 W & G Beteiligungs-GmbH & Co. KG and its subsidiaries 40,809 38,260 40,481 4,809 4,710 Shtokman Development AG 23,216 21,783 20,784 (248) (369) 21,25 STG EuRoPol GAZ S.A. 18,802 17,347 16,253 (240) ,25 Blue Stream Pipeline Company B.V. 14,228 13,353 13, , Salym Petroleum Development N.V. 13,899 15,445 12,776 5,006 8,718 Wintershall AG 11,528 12,198 11,740 1,492 3, AO Latvijas Gaze 9,968 8,957 7, ZAO Achimgaz 9,956 5,933 4,520 4,023 1, TOO KazRosGaz 9,819 12,819 35,663 4,659 8,485 AO Amber Grid* 5, AO Gazum 4,515 4,089 4, AO Lietuvos dujos* 2,994 8,267 8, ZAO Nortgaz 2,258 1,128 5,521 1, , 24 OAO Gazprom neftekhim Salavat** ,381 - (420) 21 RosUkrEnergo AG*** ,017 Others 55,471 31,347 23,248 2,800 4,909 Total 566, , ,117 93, ,705 * In accordance with the provisions of the Third Energy Package of the European Union regarding the split between the gas transmission and distribution activities in August 2013 AO Lietuvos dujos transferred assets, liabilities and rights related to gas transportation to AО Amber Grid, an associate of the Group. ** During the period from May 2012 to June 2013 as a result of series of transactions, the Group acquired an additional 30.97% interest in the ordinary shares of OAO Gazprom neftekhim Salavat for cash consideration of RR 30,934 increasing its interest to 100% (see Note 24). *** In June 2012 RosUkrEnergo AG declared dividends related to the results of its operations in The Group recognized its share of the profit in 2012 in the amount of accrued dividends. 25

26 9. FINANCIAL INVESTMENTS (continued) Investments in associates in the Consolidated Balance Sheet are stated net of impairment provision in the amount of RR 292, RR 322 and RR 236 as of 2013, 2012 and 2011, respectively. Investments in other companies 2013, 2012 and 2011 the line Investments in other companies of the Consolidated Balance Sheet includes an investment in OAO NOVATEK in the amount of 9.99% of shares in charter capital with carrying value amounting to RR 135,910, RR 110,370 and RR 122,270, respectively. The line Investments in other companies of the Consolidated Balance Sheet also includes investments in shares of energy companies, with carrying value amounting to RR 13,537, RR 24,790 and RR 33,021 as of 2013, 2012 and 2011, respectively. Investments in other companies in the Consolidated Balance Sheet are stated net of impairment provision in the amount of RR 1,627, RR 1,850 and RR 1,233 as of 2013, 2012 and 2011, respectively. The impairment provision primarily relates to non-core investments. Loans issued to companies due beyond 12 months The line Loans issued to companies beyond 12 months of the Consolidated Balance Sheet includes the loan to OAO Gazprom teploenego (former - OAO Mezhregionteploenergo), denominated in RR maturing in 2025, in the amount of RR 36,937, RR 32,840 and RR 34,224 as of 2013, 2012 and 2011, respectively. Loans issued to companies beyond 12 months in the Consolidated Balance Sheet include a foreign currency loan to the associated undertaking W&G Beteiligungs GmbH & Co. KG maturing in 2015 in amount of RR 17,214, RR 15,399 and RR 15,952 as of 2013, 2012 and 2011, respectively. In 2013 and 2012 the average interest rate on this loan was 2.1% and 2.6%, respectively. Other financial investments December December December Joint activity, including: 24,691 24,419 21,744 development of a satellite communication system (operator OAO Gazprom kosmicheskiye sistemy) 3,252 3,252 3,252 Other, including: 5,348 6,436 12,297 long-term deposits 3,209 2,063 9,633 third party promissory notes 1,438 2,288 2,113 South Pars project (oil and gas field in Iran) Total 30,039 30,855 34,041 Other long-term financial investments in the Consolidated Balance Sheet are stated net of impairment provision in the amount of RR 7,918, RR 7,915 and RR 8,095 as of 2013, 2012 and 2011, respectively. 10. INVENTORY Raw materials and other inventories In the Consolidated Balance Sheet values of raw materials and other inventories in amount of RR 151,799, RR 131,015 and RR 126,381 are disclosed net of impairment allowance in amount of RR 3,560, RR 3,401 and RR 3,962 as of 2013, 2012 and 2011, respectively. Finished goods and goods for resale In the Consolidated Balance Sheet values of finished goods and goods for resale in amount of RR 460,465, RR 342,497 and RR 300,436 are disclosed net of impairment allowance in amount of RR 616, RR 398 and RR 270 as of 2013, 2012 and 2011, respectively. 26

27 10. INVENTORY (continued) 31 December December December 2011 Gas in pipelines and storages 384, , ,323 Oil, gas condensate and refined products 53,793 54,706 37,449 Goods for resale 22,585 24,331 27,664 Total 460, , , ACCOUNTS RECEIVABLE Accounts receivable (payment expected beyond 12 months of the reporting date) The Accounts Receivable line in the Consolidated Balance Sheet includes long-term receivables for gas in the amount of RR 1,191, RR 1,187 and RR 712 as of 2013, 2012 and 2011, respectively. The Advances issued line in the Consolidated Balance Sheet includes an advance issued to NJSC Naftogas of Ukraine on account of gas transportation services in amount of RR 9,095, RR 19,016 and RR 28,938 as of 2013, 2012 and 2011, respectively. The Other receivables line in the Consolidated Balance Sheet includes receivables, issued for capital construction purposes in amount of RR 13,151, RR 20,612 and RR 47,726 as of 2013, 2012 and 2011, respectively. Accounts receivable (payment expected within 12 months of the reporting date) Accounts receivable from buyers and customers in the Consolidated Balance Sheet as of 2013, 2012 and 2011 include the following: Receivables from Europe and other countries gas, crude oil, gas condensate and refined products customers 339, , ,853 Receivables from Domestic gas, crude oil, gas condensate and refined products customers 141, , ,805 Receivables from FSU (excluding n Federation) gas, crude oil, gas condensate and refined products customers 111,807 33,560 74,369 Receivables from electric and heat energy sales customers 54,781 43,154 36,440 Other trade debtors 92,134 99,723 75,168 Total 739, , , , 2012 and 2011 accounts receivable from buyers and customers are stated net of impairment provision of RR 322,418, RR 255,025 and RR 204,850, respectively. The impairment provision has been calculated net of deferred excise tax on natural gas of RR 119, RR 134 and RR 143 as of 2013, 2012 and 2011, respectively. 2013, 2012 and 2011 advances paid in the Consolidated Balance Sheet include advances issued for capital construction purposes in amount of RR 122,999, RR 158,208 and RR 198,435, respectively. The advances paid include current advances issued to NJSC Naftogas of Ukraine for gas transportation services in the amount of RR 38,370, RR 85,854, RR nil as of 2013, 2012, 2011, respectively, and current portion of the long-term advance issued to NJSC Naftogas of Ukraine in the amount of RR 9,922 as of 2013, 2012 and 2011, respectively. 27

28 11. ACCOUNTS RECEIVABLE (continued) 2013, 2012 and 2011 other accounts receivable of the Consolidated Balance Sheet include the following: Overpayment of taxes to the budget 118, , ,902 Settlements on custom duties 57,502 67,654 69,375 Settlements on claims 3,404 1,694 17,103 Other 140,917 94,007 64,465 Total 320, , ,845 Other accounts receivable are stated net of the impairment provision amounting to RR 32,693, RR 27,149 and RR 11,278 as of 2013, 2012 and 2011, respectively. 12. OTHER FINANCIAL INVESTMENTS Short-term deposits 72,788 49,107 25,194 Shares, bonds and participatory interests 22,355 15,931 21,527 Third party promissory notes 2,246 2,274 2,644 Other 1,774 1,187 2,577 Total 99,163 68,499 51, , 2012 and 2011 other financial investments in Consolidated Balance Sheet are stated net of impairment provision of RR 269, RR 629 and RR 182, respectively. 13. CASH AND CASH EQUIVALENTS Other monetary assets in the Consolidated Balance Sheet include cash balances on bank accounts in amount of RR nil and RR 3,658 and RR 3,877 as of 2013, 2012 and 2011, respectively, which are restricted as to withdrawal under the terms of certain loans and borrowings. 14. EQUITY OAO Gazprom s charter capital amounted to RR 118,368. The number of ordinary shares issued and paid did not change in 2013 and amounted to 23,674 million with nominal value of 5 Roubles each. Treasury shares are recorded in the Consolidated Balance Sheet at their purchase cost. The number of treasury shares held by subsidiaries of the Group totals 723 million, 724 million and 726 million as of 2013, 2012 and 2011, respectively. Shares held by subsidiaries are not taken into account in calculation of earnings per share (see Note 22). The Group retains control over all treasury shares held by its subsidiaries. In accordance with the decision of the General shareholders meeting, based on the 2012 results of OAO Gazprom, final dividends were paid in 2013 in the amount of 5.99 Roubles per ordinary share. Based on the 2011 results dividends were paid in 2012 in the amount of 8.97 Roubles per ordinary share. 28

29 15. BORROWINGS ОАО GAZPROM Bank borrowings Final 31 December 31 December 31 December Lender Currency maturity ZAO «Mizuho Corporate Bank (Moscow)» US dollar ,606 26,563 28,011 «Natixis SA» 1 US dollar ,933 36,232 48,300 «Commerzbank AG» US dollar , OAO «VTB Bank» US dollar , «Bank of Tokyo-Mitsubishi UFJ Ltd.» 1 US dollar ,528 22,887 25,780 «BNP Paribas SA» 1 Euro ,550 16,451 15,935 «The Royal Bank of Scotland AG» 1 US dollar ,339 15,483 - GK «Vnesheconombank» Rouble ,698 14,808 11,779 «Deutsche Bank AG» US dollar ,327 12,387 - «UniCredit Bank AG» 1,6 US dollar ,220 13,683 17,983 «UniCredit Bank AG» 1,6 Euro ,116 13,067 16,797 «Credit Agricole CIB» Euro ,813 9,673 - «Sumitomo Mitsui Finance Dublin Limited» US dollar ,504 9,749 10,337 «HSBC Bank plc» Euro , «OAO Sberbank of» Euro , «OAO Gazprombank» Rouble ,000 10,000 10,000 «OAO Gazprombank» Rouble ,000 10,000 - «Deutsche Bank AG» US dollar ,899 9,186 9,737 «Banc of America Securities Limited» US dollar , «Bank of Tokyo-Mitsubishi UFJ Ltd.» US dollar ,874 9,171 9,719 «Bank of Tokyo-Mitsubishi UFJ Ltd.» US dollar ,830 9,122 9,672 «Citibank International plc» 1 US dollar ,020 8,563 10,262 «Banc of America Securities Limited» Euro ,143 7,285 - «OAO Sberbank of» Rouble , «Deutsche Bank AG» US dollar ,566 6,093 6,460 «UniCredit Bank AG» US dollar , «BNP Paribas SA» 1 Euro ,536 6,497 2,530 OAO «Sberbank of» Rouble , «Banc of America Securities Limited» US dollar ,895 5,471 5,800 OAO «VTB Bank» US dollar , OAO «Bank ROSSIYA» Rouble , OAO «Sberbank of» US dollar , OAO «Bank ROSSIYA» US dollar , OAO «Sberbank of» Rouble , OAO «VTB Bank» Rouble , OAO «Gazprombank» US dollar , «UniCredit Bank AG» 1,6 Rouble ,145 4,134 5,127 «Banc of America Securities Limited» Euro ,925 2,617 2,712 «Deutsche Bank AG» US dollar ,346 4,353 6,923 OAO «Gazprombank» US dollar , OAO «VTB Bank» Rouble ,010 - «The Royal Bank of Scotland AG» US dollar ,858 58,151 «Credit Agricole CIB» 1 US dollar ,607 8,064 OAO «TransKreditBank» Rouble ,055 4,535 OAO «Nordea Bank» US dollar ,796 - OAO «Sberbank of» Rouble ,503 - «WestLB AG» 1 US dollar ,214 10,224 OAO «Nordea Bank» US dollar ,038 - OAO «Sberbank of» Rouble ,501 3,500 «The Royal Bank of Scotland AG» 1 US dollar ,838 4,546 «Credit Suisse International» US dollar ,886 «Bank of Tokyo-Mitsubishi UFJ Ltd.» US dollar ,122 «J.P. Morgan Chase bank» US dollar ,576 OAO «VTB Bank» US dollar ,012 OAO «Sberbank of» US dollar ,535 29

30 15. BORROWINGS (continued) Final 31 December 31 December 31 December Lender Currency maturity «The Royal Bank of Scotland AG» 1 US dollar ,795 OAO «Nordea Bank» US dollar ,342 ZAO «Raiffaizenbank» US dollar ,220 Other Various Various 85, ,720 96,877 Total, including 484, , ,249 due within one year, including current portion of long-term borrowings 131, , ,497 1 Loans received from syndicate of banks, named lender is the bank-agent. Long-term foreign currency denominated borrowings had fixed interest rates ranging from 3.25% to 10.0% and from 5.38% to 9.0% in 2013 and 2012, respectively. Also in long-term foreign currency denominated borrowings had variable interest rates generally linked to LIBOR. Long-term borrowings denominated in n Roubles had fixed interest rates ranging from 7.4% to 11.4% and from 6.7% to 11.4% in 2013 and 2012, respectively. Interest rates on short-term foreign currency denominated borrowings ranged from 1.7% to 12.0% and 1.18% to 12.0%, in 2013 and 2012, respectively. Also in short-term foreign currency denominated borrowings had variable interest rates linked to LIBOR. Short-term borrowings denominated in n Roubles had fixed interest rates ranging from 7.25% to 12.55% and from 5.8% to 11.4% in 2013 and 2012, respectively. Loans Borrowing / Creditors Final December December December Currency maturity Loan participation notes issued in April US dollar ,927 69,533 73,707 Loan participation notes issued in July Euro ,849 57,250 - Loan participation notes issued in October Euro ,108 51,088 52,919 Loan participation notes issued in September US dollar ,697 46,118 - Loan participation notes issued in November US dollar , Loan participation notes issued in May Euro ,511 41,607 43,100 Loan participation notes issued in March Euro , Loan participation notes issued in November US dollar ,482 41,279 43,757 Loan participation notes issued in March US dollar ,425 40,298 42,718 «White Nights Finance B.V.» US dollar ,682 39,609 41,986 Loan participation notes issued in July US dollar ,297 39,251 41,608 Loan participation notes issued in August US dollar ,030 39,003 41,345 Loan participation notes issued in July Euro , Loan participation notes issued in July Euro ,041 36,715 38,031 Loan participation notes issued in April US dollar ,868 36,997 39,218 Loan participation notes issued in April US dollar ,654 34,015 36,057 30

31 15. BORROWINGS (continued) Borrowing / Creditors Final 31 December 31 December 31 December Currency maturity Loan participation notes issued in October Euro ,575 32,719 33,892 Loan participation notes issued in April Euro , Loan participation notes issued in July US dollar ,458 31,049 - Loan participation notes issued in November US dollar ,900 30,531 32,364 Loan participation notes issued in November US dollar ,877 30,510 32,342 Loan participation notes issued in June Euro ,766 28,417 29,435 Loan participation notes issued in February US dollar , Loan participation notes issued in September GBP , Loan participation notes issued in February US dollar , Loan participation notes issued in November Euro ,387 20,921 21,669 Loan participation notes issued in March Euro , Loan participation notes issued in March Euro ,686 20,294 21,022 Loan participation notes issued in November US dollar ,155 18,704 19,440 Loan participation notes issued in October CHF , n bonds series 06 issued in February Rouble , n bonds issued in November Rouble , n bonds issued in November Rouble , n bonds issued in February Rouble ,358 10,356 10,127 n bonds issued in February Rouble ,342 10,340 10,121 n bonds issued in February Rouble ,342 10,340 10,121 n bonds issued in February Rouble ,332 10,330 - n bonds series 05 issued in February Rouble , n bonds issued in April Rouble ,173 10,171 10,368 n bonds issued in December Rouble ,065 10,063 - OAO «Tomskneft VNK» Rouble , n bonds series A9 issued in February Rouble ,138 5,137 5,135 n bonds series 04 issued in February Rouble , n bonds series 03 issued in December Rouble ,038 5,037 5,041 n bonds series A11 issued in June Rouble ,013 5,011 5,008 «Eurofert Trading Limited llc» 4 Rouble ,600 5,000 5,000 n bonds issued in July Rouble ,894 2,894 n bonds series 02 issued in March Rouble ,911 Loan participation notes issued in June US dollar ,795 51,725 n bonds issued in April Rouble ,326 20,670 Loan participation notes issued in July US dollar ,617 16,555 31

32 15. BORROWINGS (continued) Borrowing / Creditors Final 31 December 31 December 31 December Currency maturity Structured export notes issued in July US dollar ,509 18,838 Loan participation notes issued in April US dollar ,347 13,089 «Eurofert Trading Limited llc» 4 Rouble ,600 8,600 n bonds issued in July Rouble ,230 Loan participation notes issued in December Euro ,788 European commercial papers issued in October US dollar ,924 n bonds series 03 issued in November Rouble ,878 «RosUkrEnergo AG» US dollar ,778 n bonds series A13 issued in June Rouble ,014 Loan participation notes issued in November Japanese yen ,470 n bonds issued in April Rouble ,554 «Gazstream SA» US dollar ,251 Other loans Various Various 19,264 29,845 26,295 Total, including 1,326,771 1,019,213 1,021,995 due within one year, including current portion of long-term borrowings 199, , ,540 2 Issuer of these bonds is Gaz Capital S.A. 3 Issuer of these notes is Gazprom International S.A. 4 Issuers of these notes are OAO WGC-2 5 Issuer of these bonds is OAO Mosenergo. 6 Loans were obtained for development of Yuzhno-Russkoye oil and gas field. 7 Issuer of these bonds is OAO Gazprom neft. 8 Issuer of these bonds is OAO TGC-1. 9 Issuer of these bonds is OOO Gazprom Capital. 10 Issuer of these bonds is OAO Gazprom 11 Issuer of these bonds is Gazprom ECP S.A. 2013, 2012 and 2011 long-term loans (including current portion of long-term loans) of RR 0, RR 12,509 and RR 18,838, respectively, were secured by cash from gas sales contracts to Western Europe. As at 2013, 2012 and 2011 according to the project facility agreement, signed within the framework of the development project of Yuzhno-Russkoe oil and gas field with the group of international financial institutions with UniCredit Bank AG acting as a facility agent, ordinary shares of OAO Severneftegazprom with the pledge value of RR 16,968 and fixed assets with the pledge value of RR 26,210 were pledged to ING Bank N.V. (London branch) up to the date of full redemption of the liabilities on this agreement. 2013, 2012 and 2011 carrying amount of these fixed assets is RR 19,247, RR 21,481 and RR 23,724, respectively. Management of the Group does not expect any substantial consequences to occur which relate to respective pledge agreement. Fixed interest rates on long-term foreign currency denominated loans ranged from 2,85% to 10.5% and from 2.0% to 10.5% in 2013 and 2012, respectively. Fixed interest rates on long-term loans denominated in n Roubles ranged from 7.23% to 13.75% and from 1.0% to 13.75% in 2013 and 2012, respectively. In 2013 and 2012 fixed interest rates on short-term loans denominated in n Roubles ranged from 0.3% to 8.25% and from 0.3% to 14.0%, respectively. Interest rate on short-term foreign currency denominated loans ranged from 1.33% to 3.6% in loan participation notes with the nominal value of RR 39,868 at an interest rate of 8.625% issued by Gaz Capital S.A. in April 2004 due in 2034 were classified as long-term portion of longterm borrowings as the noteholders did not execute the right of early redemption. 32

33 16. TAXATION Profit tax ОАО GAZPROM In 2013 and 2012 theoretical profit tax determined based on accounting profit and statutory rates amounted to RR 235,331 and RR 210,964, respectively. According to the tax returns the profit tax in 2013 and 2012 included within the line Current Profit Tax amounted to RR 197,644 and RR 297,718, respectively. Decrease of current profit tax in comparison with 2012 was mainly due to application of a special depreciation premium of 30% to fixed assets that were put into operation after January 1, 2013 but prior to the submission of documents for their state registration in accordance with amended n Tax Code. According to updated tax returns submitted in 2013 the profit tax amounted to RR 9,834. According to updated tax returns submitted in 2012 the profit tax amounted to minus RR 12,962. In 2013 permanent differences which increase the taxable profit exceeded permament differences which decrease the taxable profit by RR 622,291 (in 2012 by RR 367,383). The permament differences principally arise from non-deductible expenses, such as excess of depreciation charge in respect of fixed assets revalued for accounting purposes as compared to depreciation charge for tax purposes, non-production costs, social expenses, charitable donations, and expenses exceeding prescribed limits. In 2013 and 2012 incurred deductible temporary differences which impacted the difference between the theoretical profit tax expense and the current profit tax amounted to RR 238,699 and RR 395,971, respectively. Deductible temporary differences incurred in 2013 principally arise from accrual of contingent liabilities for gas price adjustment and other contingent liabilities, longer useful lives of certain fixed asset items for tax purposes as compared to useful lives of these items for accounting purposes, the fact that expenses for geological and geophysical exploration are deductible for tax purposes later than for accounting purposes, and elimination in accounting records of unrealised income from intergroup transactions. Deductible temporary differences settled in 2013 and 2012 totaled RR 418,038 and RR 208,831, respectively. Settlement of these differences in 2013 is principally due to decrease of the current tax base related to contingent liabilities and geological and geophysical exploration expenses recognized for accounting purposes in prior periods, decrease of the current tax base by the amount of depreciation charge, accrued on fixed assets, useful life of which for tax purposes is longer than for accounting purposes, during prior tax periods, and recognition of the profit that was formerly excluded as unrealised income from intergroup transactions for accounting purposes in the current period. In 2013 and 2012 incurred taxable temporary differences which impacted the difference between the theoretical profit tax expense and the current profit tax expense amounted to RR 702,829 and RR 348,888, respectively. Taxable temporary differences in 2013 principally arise from longer useful lives of certain fixed asset items for accounting purposes as compared to useful lives of these items for tax purposes, application of a special depreciation premium of 30% to fixed assets that were put into operation after January 1, 2013 but prior to submission of documents for their state registration, one-time recognition of one-off payments for mineral resources use for tax purposes, and storage costs included in the cost of finished goods for accounting purposes. Taxable temporary differences settled in 2013 and 2012 totaled RR 316,667 and RR 174,160, respectively. Settlement of these differences in 2013 is principally due to increase of the current tax base by the amount of depreciation charge, accrued on fixed assets, useful life of which for accounting purposes is longer than for tax purposes, during prior tax periods, as well as by the amount of costs of storage included in the cost of finished goods recognized in prior period for accounting purposes. Starting from 1 January 2012 the Gazprom Group established a CGT, the liable partner of which is OAO Gazprom. On 20 March 2012 the Interdistrict Inspectorate of the Federal Tax Service for Major Taxpayers No. 2 registered the agreement on establishment of CGTof the Group with 56 participants. In December 2012 the Interdistrict Inspectorate of the Federal Tax Service for Major Taxpayers No. 2 registered an amendment to the agreement on establishment of CGTof the Gazprom Group which increased the number of participants up to 65 startig from 1 January In 2013 the Interdistrict Inspectorate of the Federal Tax Service for Major Taxpayers No. 2 registered an amendment No. 2 dated 26 November 2013 to the agreement on establishment of CGTof the Gazprom Group Group which increased the number of participants up to 69 startig from 1 January Profit tax of the CGT for the years ended 2013 and 2012 is RR 153,134 and RR 251,386, respectively. 33

34 17. SALES ОАО GAZPROM For 2013 For 2012 Gas sales (net of VAT and other similar mandatory payments) n Federation 773, ,319 Former Soviet Union countries (excluding n Federation) 423, ,516 Europe and other countries 1,687,335 1,525,346 Net sales of gas 2,884,836 2,795,181 Sales of refined products (net of VAT and other similar mandatory payments) n Federation 820, ,265 Former Soviet Union countries (excluding n Federation) 80,557 73,267 Europe and other countries 449, ,475 Net sales of refined products 1,350,733 1,192,007 Sales of oil and gas condensate (net of VAT and other similar mandatory payments) n Federation 95, ,149 Former Soviet Union countries (excluding n Federation) 50,115 30,186 Europe and other countries 128, ,648 Net sales of oil and gas condensate 273, ,983 Sales of electric and heat energy (net of VAT) n Federation 362, ,997 Former Soviet Union countries (excluding n Federation) 2,191 5,586 Europe and other countries 10,983 11,186 Net sales of electric and heat energy 376, ,769 Sales of gas transportation services (net of VAT) n Federation 125,502 88,827 Former Soviet Union countries (excluding n Federation) 1,434 2,059 Europe and other countries 6 - Net sales of gas transportation services 126,942 90,886 Other sales (net of VAT) - n Federation 201, ,452 Former Soviet Union countries (excluding n Federation) 4,992 5,058 Europe and other countries 28,124 11,566 Total other sales 234, ,076 Net sales 5,247,300 5,002,902 Net sales of gas increased by 3% in the year ended December 31, 2013 compared to the year ended December 31, The overall increase of net sales of gas was primarily driven by increase of volumes of gas sold to the customers in European countries and increase of average prices of gas for customers in n Federation in the year ended December 31, 2013 compared to the same period of the prior year. The increase of net sales of refined products in the year ended December 31, 2013 compared to the year ended December 31, 2012 is mainly due to increase of volumes sold by Gazprom neft to customers in Europe and other countries and in n Federation as well as an increase in prices. Net sales of electric and heat energy increased in the year ended December 31, 2013 compared to the same period of the prior year. Increase of electric and heat energy sales was mainly due to consolidation of OAO MIPC since September

35 18. COST OF SALES, COMMERCIAL AND MANAGEMENT EXPENSES For 2013 For 2012 Depreciation and amortization 688, ,379 Taxes included in cost of sales 654, ,685 Purchased gas 438, ,311 Staff costs and social expenses 432, ,838 Purchased oil 365, ,010 Transit costs for gas, oil and refined products 359, ,098 Materials 234, ,264 Repairs and maintenance 201, ,018 Cost of goods for resale 198, ,311 Energy 86,057 77,543 Rent, lease payments 42,969 41,439 Insurance 34,332 27,944 Other 248, ,383 Changes in inventories of finished goods, work in progress and other effects (167,335) (63,925) Total cost of goods, products, works and services sold, commercial and management expenses 3,817,417 3,646,298 The decrease of purchased gas is primarily explained by decline of volume of gas purchased from third parties in the n Federation. Mineral Extraction Tax within the line "Taxes included in cost of sales" amounted to RR 467,606 and RR 413,353 in 2013 and 2012, respectively. The cost of purchased oil decreased due to a drop in purchased oil volumes from third parties. Other expenses primarily include transportation costs, programm support services, processing services, advertising, legal and consulting services, cost of geological exploration and other. 35

36 19. OTHER INCOME AND EXPENSES Note For 2013 For 2012 Income Expenses Income Expenses Sales and purchases of foreign currency 3,646,669 3,646,100 3,634,331 3,634,482 Income/expense from trading activity without delivery 1,498,368 1,492,518 1,323,991 1,321,170 Exchange differences 266, , , , Accrual/reversal of estimated liabilities, including: 88,636 48, ,418 Bad debts provision - 64,006-67,235 Amortization of goodwill - 58,518-54,645 Social expenses - 35,498-31,344 Profit and losses of previous years identified in the reporting period 29,726 12,937 22,564 59,782 Adjustment of investments (to fair value) 25,970 19,740 1,674 20,652 Income/expense related to sale of other assets 25,176 28,550 34,232 30,984 Transactions with securities, including promissory notes 20,013 18,692 22,447 17,885 Income/expense related to sale and disposal of fixed assets 11,012 7,102 5,959 5,991 Fines and penalties for breach of contracts 6,691 4,214 4,146 2,668 Transfer of accounts receivable 5,727 5,362 9,445 9,745 Services of credit organizations - 4,553-5,897 Income/expense related to gratuitous transfer of assets 790 1, ,582 Investment impairment provision - 1, Accounts receivable written-off - 1, Other 30, ,293 28, ,776 Total 5,656,376 5,950,244 5,553,537 5,954,755 The Group recognized estimated liability regarding possible gas price adjustment derived from foreign customers claims based on the contract terms. The contingent liabilities as of and in amount RR 8,430 and RR 115,255 do not include possible correction of customs duties accrued formerly. In 2013 the Group included in other income reversal of previously accrued estimated liabilities in amount of RR 74,176 in respect of price adjustments, related to claims of European customers, based on terms of agreements. The line Profit and losses of previous years identified in the reporting period for 2013 year includes positive effect of corrections regarding gas price revision in amount of RR 217. For 2012 year negative effect of corrections regarding gas price revision amounted to RR 43,385. These corrections refer to price adjustment of gas delivered in previous periods for which a discount was agreed in 2013 and 2012 respectively. Other income and expenses related to accrual (release) of bad debts and investment impairment provisions are presented netted. 36

37 20. CONSOLIDATED SUBSIDIARIES AND ASSOCIATES OF THE GROUP Note Principal subsidiaries as of 2013 Company Share in Charter Type of activity Location Capital*, % OOO Aviapredpriyatie Gazprom avia 100 Air transportation services ОАО Vostokgazprom 100 Gas production GAZPROM Schweiz AG 100 Gas distribution Switzerland ZAO Gazprom Armenia Gas transportation and gas 80 (ZAO ArmRosgazprom)** distribution Armenia OOO Gazprom VNIIGAZ 100 Research and development OAO Gazprom gazoraspredelenie 100 Gas network operation OAO Gazprom gazoraspredelenie Sever 91 Gas network operation OOO Gazprom geologorazvedka 100 Exploration, geophysics OOO Gazprom georesurs 100 Exploration, geophysics GAZPROM Germania GmbH 100 Gas distribution Germany Gazprom Gerosgaz Holdings B.V. 100 Investing Netherlands Gazprom Global LNG Ltd. 100 Participation in LNG production and realization projects United Kingdom OOO Gazprom dobycha Astrakhan 100 Production and refining of hydrocarbons OOO Gazprom dobycha Krasnodar 100 Gas production OOO Gazprom dobycha Nadym 100 Production of hydrocarbons OOO Gazprom dobycha Noyabrsk 100 Production of hydrocarbons OOO Gazprom dobycha Orenburg 100 Production, refining and transportation of hydrocarbons OOO Gazprom dobycha Urengoy 100 Production of hydrocarbons OOO Gazprom dobycha shelf 100 Development of hydrocarbons fields OOO Gazprom dobycha Yamburg 100 Production of hydrocarbons OOO Gazprom invest 100 Construction OOO Gazprom invest Vostok 100 Construction ZAO Gazprom invest RGK 100 Information, consulting and (ZAO RSh-Centr)** transportation services ZAO Gazprom invest Yug 100 Construction OOO Gazprom investholding 100 Investing Gazprom International Germany GmbH (Gazprom Libyen Verwaltungs GmbH)** 100 Investing Germany OOO Gazprom inform 100 Informational and technical assistance OOO Gazprom komplektatciya 100 Trading Gazprom Marketing and Trading Ltd. 100 Gas distribution United Kingdom OOO Gazprom mezhregiongaz 100 Gas distribution 24 OAO Gazprom neftekhim Salavat*** 100 Processing and distribution of refined products ZAO Gazprom neft Orenburg 100 Exploration and sales of oil and petroleum gas Gazprom Neft Trading GmbH 100 Oil products trading Austria OOO Gazprom neft shelf 100 Development of oil and gas fields OAO Gazprom neft 96 Exploration, refining and sales of crude oil ООО Gazprom pererabotka 100 Refining of hydrocarbons OOO Gazprom podzemremont Orenburg 100 Repairs, modernization, reconstruction and conservation of gas production wells OOO Gazprom podzemremont Urengoy 100 Repairs, modernization, reconstruction and conservation of gas production wells ООО Gazprom PKhG 100 Gas storage 37

38 20. CONSOLIDATED SUBSIDIARIES AND ASSOCIATES OF THE GROUP (continued) Note Company Share in Charter Type of activity Location Capital*, % Gazprom Sakhalin Holdings B.V. 100 Foreign investing Netherlands OOO Gazprom torgservis 100 Trading OAO Gazprom transgaz Belarus 100 Transportation and gas distribution Belorussia OOO Gazprom transgaz Volgograd 100 Gas transportation OOO Gazprom transgaz Ekaterinburg 100 Gas transportation OOO Gazprom transgaz Kazan 100 Gas transportation OOO Gazprom transgaz Krasnodar 100 Gas transportation OOO Gazprom transgaz Makhachkala 100 Gas transportation OOO Gazprom transgaz Moskva 100 Gas transportation OOO Gazprom transgaz Nizhny Novgorod 100 Gas transportation OOO Gazprom transgaz Samara 100 Gas transportation OOO Gazrpom transgaz St. Petersburg 100 Gas transportation OOO Gazprom transgaz Saratov 100 Gas transportation OOO Gazprom transgaz Stavropol 100 Gas transportation OOO Gazprom transgaz Surgut 100 Gas transportation OOO Gazprom transgaz Tomsk 100 Gas transportation OOO Gazprom transgaz Ufa 100 Gas transportation OOO Gazprom transgaz Ukhta 100 Gas transportation OOO Gazprom transgaz Tchaikovsky 100 Gas transportation OOO Gazprom transgaz Yugorsk 100 Gas transportation Gazprom Finance B.V. 100 Investing Netherlands OOO Gazprom tsentrremont 100 Agency on technical maintenance and repairs OOO Gazprom export 100 Foreign trade OOO Gazprom energo 100 Electric energy transmission OOO Gazprom energoholding 100 Investing, asset management Gazprom EP International B.V. 100 Investments, asset management Netherlands ZAO Gazprom YRGM Development***** 100 Raw hydrocarbons distribution ZAO Gazprom YRGM Trading***** 100 Raw hydrocarbons distribution ООО Gazpromneft-Vostok 100 Oil and gas production ZAO Gazpromneft-Kuzbass 100 Oil products trading OAO Gazpromneft-MNPZ 96 Processing and distribution of refined products OAO Gazpromneft-Noyabrskneftegaz 100 Oil and gas production OAO Gazpromneft-Omsk 100 Oil products trading OAO Gazpromneft-Omskiy NPZ 100 Oil refining ZAO Gazpromneft-Severo-Zapad 100 Oil products trading OOO Gazpromneft-Khantos 100 Oil and gas production OOO Gazpromneft-Centr 100 Oil products trading OOO Gazpromneftfinans 100 Investing ООО Gazpromtrans 100 Forwarding services OAO Gazpromtrubinvest 100 Production and sales of pipes OOO Gazflot 100 Transportation, offshore field development OAO Daltransgaz 100 Gas transportation OOO Zapolyarneft 100 Oil and gas production ОАО Krasnoyarskgazprom 75 Exploration, geophysics 23 OAO MIPC 90 Generation, purchase and supply of heat energy Production of electric and heat ОАО Mosenergo 53 power, electric power supply services Naftna Industrija Srbije a.d. 56 Extraction and processing of oil, distribution of refined products Serbia 38

39 20. CONSOLIDATED SUBSIDIARIES AND ASSOCIATES OF THE GROUP (continued) Note Company Share in Charter Type of activity Location Capital*, % OOO Novourengoysky GCC 100 Construction of gas chemical complex OAO WGC-2 77 Production and sales of electric and heat energy ZАО Purgaz 51 Gas production OAO Regiongazholding 57 Construction and maintenance of gas facilities ZАО Rosshelf 57 Investments in oil and gas fields OAO Severneftegazprom***** 50 Exploration, processing and sales of gas and gas condensate OAO Sibirskie gazovye seti (OOO Sibirskie gazovye seti)** 100 Gas network operation Sibir Energy Ltd. 100 Exploration, processing and sales of hydrocarbons United Kingdom OOO Sibmetakhim 100 Gas processing and sales of petrochemicals ОАО Spetsgazavtotrans 51 Construction and transportation services OAO TGC-1 52 Production and sales of electric and heat energy ОАО Teploset Sankt-Peterburga 75 Transportation and distribution of electric and heat energy ОАО Tomskgazprom 100 Exploration, production, transportation of hydrocarbons OOO Faktoring-Finance 90 Investing ОАО Tsentrgaz 100 Construction ОАО Tsentrenergogaz 66 Repair and maintenance of gas equipment OAO Yuzhuralneftegaz 88 Exploration and sales of oil and ZAO Yamalgazinvest 100 petroleum gas Designing and construction of gas facilities * Cumulative share of the Group in charter capital of investees. ** The indicated subsidiaries were renamed (former name is put in the brackets). *** During the period from May 2012 to June 2013 as a result of series of transactions, the Group acquired an additional 30.97% interest in the ordinary shares of OAO Gazprom neftekhim Salavat for cash consideration of RR 30,934 increasing its interest to 100% (see Note 24). **** In September 2013 the Group acquired 89.98% interest in the ordinary shares of OAO MIPC and heat assets from the Moscow Government for cash consideration of RR 99,866 including VAT in the amount of RR 1,246 related to acquired heat assets. As a result of the acquisition, the Group obtained control over OAO MIPC (see Note 23). ***** Group s portion of voting shares. 39

40 20. CONSOLIDATED SUBSIDIARIES AND ASSOCIATES OF THE GROUP (continued) Principal associates as of 2013 Company Share in Charter Type of activity Location Capital*, % AO Amber Grid** 37 Gas transportation Lithuania ZAO Achimgaz 50 Exploration and production of gas and gas condensate Bosphorus Gaz Corporation A.S.*** 71 Gas distribution Turkey Wintershall AG 49 Production of oil and gas distribution Germany W&G Beteiligungs GmbH & Co. KG and its subsidiaries 50 Transportation and sales of gas Germany Wintershall Erdgas Handelshaus GmbH & Co.KG (WIEH) 50 Gas distribution Germany Gaz Project Development Central Asia AG 50 Gas production Switzerland OAO Gazprombank 36 Banking AO Gazum 25 Gas distribution Finland Blue Stream Pipeline Company B.V. 50 Construction, gas transportation Netherlands SGT EuRoPol GAZ S.A. 48 Transportation and gas distribution Poland TOO KazRosGaz 50 Gas processing and sales of gas and refined products Kazakhstan АО Latvijas Gaze 34 Transportation and gas distribution Latvia АО Lietuvos dujos 37 Gas distribution Lithuania АО Moldovagaz 50 Transportation and gas distribution Moldova Nord Stream AG 51 Construction, gas transportation Switzerland ZAO Nortgaz 50 Exploration and sale of gas and gas condensate AO Overgaz Inc. 50 Gas distribution Bulgaria ZAO Panrusgas 40 Gas distribution Hungary AO Prometey Gaz 50 Gas distribution, construction Greece RosUkrEnergo AG 50 Gas distribution Switzerland Salym Petroleum Development N.V. 50 Oil production Netherlands Sakhalin Energy Investment Company Ltd. 50 Oil production, production of LNG Bermuda Islands OAO NGK Slavneft 50 Production of oil, sale of oil and refined products OAO Tomskneft VNK 50 Oil production AO Turusgas 45 Gas distribution Turkey Shtokman Development AG*** 75 Gas exploration and production Switzerland ООО Yamal razvitie**** 50 Investment, asset management * Cumulative share of the Group in charter capital of investments. ** In accordance with the provisions of the Third Energy Package of the European Union regarding the split between the gas transmission and distribution activities in August 2013 AO Lietuvos dujos transferred assets, liabilities and rights related to gas transportation to AО Amber Grid, an associate of the Group. *** Investments in companies continue to be accounted under the equity method of accounting, as the Group did not obtain control due to its corporate governance structure. **** OOO Yamal razvitie is a holder of 51% share in OOO SeverEnergiya. In December 2013 OOO Yamal razvitie acquired 60% interest in Artic B.V. for cash consideration of USD 2,940 million. Artic B.V. owns 49% interest in OOO SeverEnergiya. As a result of the transaction, the Group s effective interest in OOO SeverEnergiya increased from 24.40% to 38.46%. 40

41 21. RELATED PARTIES As defined by RAR 11/2008 Related parties, parties are considered to be related if one party has the ability to control another party for exercise significant influence over another party in making financial and operational decisions, or parties are engaged in joint activity. A non-state pension fund acting in favor of entity s employees is also considered a related party. Associates and other major related parties In 2013 and 2012 the Group had following operations with major associates and other related parties: For 2013 For 2012 Revenue (net of VAT, excises and other similar mandatory payments): Gas sales Wintershall Erdgas Handelshaus GmbH & Co. KG (WIEH) 133,070 97,321 W & G Beteiligungs-GmbH & Co. KG and its subsidiaries 107,558 79,420 ZAO Panrusgaz 61,392 51,102 AO Gazum 29,030 30,537 AO Moldovagaz 20,502 25,745 Bosphorus Gaz Corporation A.S. 17,730 3,854 Wintershall Erdgas Handelshaus Zug AG (WIEE)* 13,586 26,015 AO Latvijas Gaze 9,490 9,920 AO Lietuvos dujos 7,608 12,289 n-serbian Trading Corporation a.d. 7,168 7,365 SGT EuRoPol GAZ S.A. 3,911 2,973 AO Overgaz Inc 3,310 29,141 PremiumGas S.p.A. - 10,111 Gas transportation services TOO KazRosGas 1,421 2,042 Crude oil, gas condensate and refined products sales OAO NGK Slavneft and its subsidiaries 26,063 34,057 OOO Gazpromneft Aero Sheremetyevo 12,263 7,977 ZAO SOVEKS 5,535 5,025 OAO Gazprom neftekhim Salavat** - 10,036 Gas refining services TOO KazRosGas 5,247 5,079 Purchases: Gas purchases W & G Beteiligungs-GmbH & Co. KG and its subsidiaries 73,071 62,966 TOO KazRosGaz 22,724 39,930 OOO SeverEnergiya and its subsidiaries 9,858 3,132 Sakhalin Energy Investment Company Ltd. 5,715 4,604 ZAO Nortgaz 2,222 3,713 Gas transportation services Nord Stream AG 37,058 24,785 W & G Beteiligungs-GmbH & Co. KG and its subsidiaries 13,586 11,149 SGT EuRoPol GAZ S.A. 9,757 10,341 Blue Stream Pipeline Company B.V. 3,189 5,622 Oil and oil products purchases OAO NGK Slavneft and its subsidiaries 84,091 88,228 OAO Tomskneft VNK and its subsidiaries 53,293 52,097 Salym Petroleum Development N.V. 34,918 38,179 Sakhalin Energy Investment Company Ltd. 13,396 - Oil and oil product refining services OAO NGK Slavneft and its subsidiaries 11,853 10,976 Pension fund contributions: NPF Gazfund 11,890 8,025 * Wintershall Erdgas Handelshaus Zug AG (WIEE) is the subsidiary of Wintershall Erdgas Handelshaus GmbH &Co.KG (WIEH). ** During the period from May 2012 to June 2013 as a result of series of transactions, the Group acquired an additional 30.97% interest in the ordinary shares of OAO Gazprom neftekhim Salavat for cash consideration of RR 30,934 increasing its interest to 100% (see Note 24). 41

42 21. RELATED PARTIES (continued) In the Group sold gas to associates and other major related parties mainly using tariffs set by FTS. Export sales are based on long-term contracts with prices linked to world energy commodity prices. The following balances of accounts receivable and accounts payable with major associates and other related parties were recorded on the Consolidated Balance Sheet of the Group as of 2013, 2012 and 2011: Accounts receivable: Payment expected within 12 months of the reporting date: Wintershall Erdgas Handelshaus GmbH & Co.KG (WIEH) 20,501 14,406 16,325 OAO Gazprombank 9,339 1, W & G Beteiligungs-GmbH & Co. KG. and its subsidiaries 8,452 11,420 7,908 AO Overgaz Inc. 8,011 10,000 7,410 ZAO Panrusgaz 5,774 8,134 8,117 OAO NGK Slavneft and its subsidiaries 4,512 1,701 3,361 AO Gazum 4,157 3,892 4,077 Bosphorus Gaz Corporation A.S. 2, АО Lietuvos dujos 2,000 2,212 2,319 Wintershall Erdgas Handelshaus Zug AG (WIEE) 1,290 2,451 1,131 TOO KazRosGaz n-serbian Trading Corporation a.d AO Latvijas Gaze AO Moldovagaz* - 2,348 19,902 OAO Gazprom neftekhim Salavat - - 8,532 Accounts payable: GT EuRoPol GAZ S.A. 7,702 6,565 6,997 W & G Beteiligungs-GmbH & Co. KG. and its subsidiaries 4,715 7,906 2,956 Nord Stream AG 4,179 2,892 1,999 Salym Petroleum Development N.V. 3,839 3, АО Lietuvos dujos** 3, TOO KazRosGaz 2,992 2,783 3,267 OAO NGK Slavneft and its subsidiaries 2,466 1,502 1,976 Sakhalin Energy Investment Company Ltd AO Latvijas Gaze ,283 OAO Gazprombank * 2013, 2012 and 2011 accounts payable include penalty fees for gas in amount of RR 0, RR 0 and RR 15,514 respectively. Accounts receivable are stated net of provision for doubtful debts amounting to RR 158,106, RR 131,087 and RR 92,643 as of 2013, 2012 and 2011, respectively. ** 2013 accounts payable include estimated liability relating to gas price adjustment in amount of RR 3,

43 21. RELATED PARTIES (continued) Loans issued to major associates and promissory notes received from major associates as of 2013, 2012 and 2011 are: Loans and promissory notes due for repayment beyond 12 months of the reporting date: W & G Beteiligungs-GmbH & Co. KG. and its subsidiaries 17,214 15,399 15,952 OOO Yamal razvitie 2, Gas Project Development Central Asia AG 1,826 1,707 1,707 OAO Gazprombank Bosphorus Gaz Corporation A.S Salym Petroleum Development N.V Loans and promissory notes due for repayment within 12 months of the reporting date: OOO Yamal razvitie 26,348 26,348 26,348 OAO Gazprombank 1, Salym Petroleum Development N.V ,878 Nord Stream AG - - 2,593 Loans received from major associates as of 2013, 2012 and 2011 are presented as follows: Loans and borrowings due for repayment beyond 12 months of the reporting date: OAO Gazprombank 26,195 24,569 16,229 OAO Tomskneft VNK and its subsidiaries 9, Loans and borrowings due for repayment within 12 months of the reporting date (including current portion of long-term liabilities): OAO Gazprombank 13,614 21,429 11,202 OAO Tomskneft VNK and its subsidiaries - 5,105 6,647 RosUkrEnergo AG - 2,248 10,778 Wintershall Erdgas Handelshaus GmbH & Co.KG (WIEH) - 1,281 1,095 The Group received loans from its major associates in n Roubles at rates ranging from 8.5% to 12.0% in The similar figures for 2012 were 2.6% to 10.35%. Besides, the Group received loans nominated in foreign currency at the rates ranging from 1.7% to 11.0% in The similar figures for 2012 were 0.71% to 9%. 43

44 21. RELATED PARTIES (continued) Remuneration to key management personnel Key management personnel s (the members of the Board of Directors and Management Committee of OAO Gazprom) short-term compensation, including salary, bonuses and remuneration for serving in the management bodies of OAO Gazprom and its subsidiaries, amounted to RR 2,992 and RR 2,130 for the years ended 2013 and 2012, respectively. The above amounts include personal income tax and insurance premiums. Government representatives serving in the Board of Directors do not receive any remuneration from OAO Gazprom and its subsidiaries. Remuneration of members of the Board of Directors is approved by the annual meeting of shareholders. Compensation of key management personnel (other than remuneration of the Board of Directors) paid by OAO Gazprom and its subsidiariesis determined by the terms of the employment contracts. Key management personnel also receive certain short-term benefits related to healthcare. According to n legislation, the Group makes contributions to the n Federation State pension fund for all of its employees including key management personnel. OAO Gazprom provided medical insurance and liability insurance to key management personnel. Voluntary medical insurance amounted to RR 1 and liability insurance amounted to RR 1 for 2013 and 2012, respectively. 22. EARNINGS PER SHARE Basic earnings per share have been calculated by dividing the net profit for the year by the weighted average number of ordinary shares outstanding during the reporting year. The weighted average number of ordinary shares outstanding for 2013 and 2012 amounted to RR 22,948 and 22,950 million shares. Diluted earnings per share have not been calculated due to the absence of instruments convertible to ordinary shares as of 2013 and ACQUISITION OF OAO MOSCOW INTEGRATED POWER COMPANY (ОАО MIPC) In September 2013 the Group acquired 89.98% interest in the ordinary shares of OAO Moscow Integrated Power Company (OAO MIPC) and heat assets from the Moscow Government for cash consideration of RR 99,866 including VAT in the amount of RR 1,246 related to acquired heat assets. As a result of the acquisition, the Group obtained control over OAO MIPC. Considering treasury shares of OAO MIPC, the Group s effective interest is 98.77%. The primary business activity of OAO MIPC is generation, purchase and supply of heat energy in the form of heating and hot water to commercial and residential customers in the City of Moscow the title on the assets acquired in the amount of RR 6,920 excluding VAT was not transferred to the Group. As a result of these transactions goodwill in amount of RR 69,957 has arisen in respect of OAO MIPC acquisition. 24. ACQUISITION OF OAO GAZPROM NEFTEKHIM SALAVAT In December 2008 the Group acquired a 50% interest plus one ordinary share in OAO Gazprom neftekhim Salavat for cash consideration of RR 20,959. Since then the Group started to exercise significant influence and applied the equity method of accounting for its investment in OAO Gazprom neftekhim Salavat. During the period from November 2011 to December 2011 as a result of series of transactions, the Group acquired an additional 19.03% interest in OAO Gazprom neftekhim Salavat for total cash consideration of RR 19,008. Despite having a 69.03% interest as of 2011, the Group still did not exercise control over OAO Gazprom neftekhim Salavat due to its corporate governance regulations. In May 2012 the Group acquired an additional 18.48% interest in OAO Gazprom neftekhim Salavat. As a result the Group s share in OAO Gazprom neftekhim Salavat increased to 87.51% and the Group obtained control over OAO Gazprom neftekhim Salavat. During the period from September 2012 to June 2013 as a result of a series of transactions, the Group acquired an additional 12.49% interest in the ordinary shares of OAO Gazprom neftekhim Salavat for cash consideration of RR 12,476 increasing its interest to 100%. As a result of these transactions goodwill of OAO Gazprom neftekhim Salavat in amount of RR 70,882 arose. 44

45 25. COMMITMENTS AND CONTINGENCIES Estimated liabilities 2012 Accrued Utilized Recovered 2013 Estimated liabilities on bonus payments at the year end 24,306 33,096 (28,855) - 28,547 Estimated liabilities on vacations 20,156 43,998 (40,214) - 23,940 Estimated liabilities on retirement benefits payable as a lump sum 16,669 11,590 (13,232) - 15,027 Estimated liabilities regarding fixed assets liquidation and environmental restoration in the context of subsurface use 121,930 8,943 (1 114) (13 276) Other estimated liabilities, including: 166,524 52,800 (81 816) (74 243) estimated liabilities regarding gas price adjustment 115,255 7,763 ( 40,412) (74,176) 8,430 Total, including: 349, ,427 (165,231) (87,519) 247,262 with maturity up to 1 year 225, ,023 (163,937) (74,243) 127, Accrued Utilized Recovered 2012 Estimated liabilities on bonus payments at the year end 21,745 27,889 (25,328) - 24,306 Estimated liabilities on vacations 17,931 36,469 (34,244) - 20,156 Estimated liabilities on retirement benefits payable as a lump sum 14,276 10,727 (8,334) - 16,669 Estimated liabilities regarding fixed assets liquidation and environmental restoration in the context of subsurface use 110,890 12,294 (1,254) - 121,930 Other estimated liabilities, including: 46, ,212 (37,244) (299) 166,524 estimated liabilities regarding gas price adjustment - 115, ,255 Total, including: 211, ,591 (106,404) (299) 349,585 with maturity up to 1 year 97, ,519 (103,132) (299) 225,558 Pension obligations Due to the fact that regulation of accrual of pension obligations in the accounting is not foreseen by the existing regulatory documents, calculation of pension obligations and assets is only possible for the Group as a whole and is provided in the Notes to the IFRS Consolidated Financial Statements ( Guarantees issued The following guarantees were issued to third parties on behalf of other entities: Outstanding guarantees issued on behalf of: Sakhalin Energy Investment Company Ltd. 89,825 94, ,220 Nord Stream AG 50,830 40, ,616 EM Interfinance Limited 3,668 5,385 5,869 Blackrock Capital Investments Limited 4,804 4,573 4,985 OOO Production Company VIS 8,164 2,507 - Blue Stream Pipeline Company B.V. - 2,124 8,225 Devere Capital International Limited - - 1,958 OAO Group E ,498 Other 43,752 37,711 32,193 Total 201, , ,564 45

46 25. COMMITMENTS AND CONTINGENCIES (continued) In June 2008 the Group provided a guarantee to the Bank of Tokyo-Mitsubishi UFJ Ltd. on behalf of Sakhalin Energy Investment Company Ltd. under the credit facility up to the amount of the Group s share (50%) in the obligations of Sakhalin Energy Investment Company Ltd. toward the Bank of Tokyo-Mitsubishi UFJ Ltd. The above guarantees amounted to RR 89,825, RR 94,145and RR 103,220 as of 2013, 2012 and 2011, respectively. In March 2010 the Group provided a guarantee to Societe Generale on behalf of Nord Stream AG under the credit facility for financing of Nord Stream gas pipeline Phase 1 construction completion. According to guarantee agreements the Group has to redeem debt up to the amount of the Group s share (51%) in the obligations of Nord Stream toward the Societe Generale in the event that Nord Stream fail to repay those amounts the above guarantee within the Group s share in Nord Stream AG obligations to the bank amounted to RR 72,205. Construction of Nord Stream gas pipeline Phase 1 was completed in the fourth quarter As a result as of 2012 the obligation under the credit facility for financing of Nord Stream gas pipeline Phase 1 construction completion was redeemed. In May 2011 the Group provided a guarantee to Societe Generale on behalf of Nord Stream AG under the credit facility for financing of Nord Stream gas pipeline Phase 2 construction completion. According to guarantee agreements the Group has to redeem debt up to the amount of the Group s share (51%) in the obligations of Nord Stream toward the Societe Generale in the event that Nord Stream fail to repay those amounts. 2013, 2012 and 2011 the above guarantee within the Group s share in Nord Stream AG obligations to the bank amounted to RR 50,830, RR 40,519 and RR 33,411, respectively. In 2006 the Group guaranteed Asset Repackaging Trust Five B.V. (registered in Netherlands) bonds issued by five financing entities: Devere Capital International Limited, Blackrock Capital Investments Limited, DSL Assets International Limited, United Energy Investments Limited, EM Interfinance Limited (registered in Ireland) in regard to bonds issued with due dates December 2012, June 2018, December 2009, December 2009 and December 2015, respectively. Bonds were issued for financing of construction of a transit pipeline in Poland by SGT EuRoPol GAZ S.A. In December 2009 loans issued by DSL Assets International Limited and United Energy Investments Limited were redeemed. In December 2012 loans issued by Devere Capital International Limited were redeemed. As a result the guarantees issued on behalf of Devere Capital International Limited, Blackrock Capital Investments Limited and EM Interfinance Limited amounted to RR 8,472, RR 9,958 and RR 12,812 as of 2013, 2012 and 2011, respectively. In July 2012 the Group provided a guarantee to OAO Sberbank Rossii on behalf of OOO Production Company VIS as a security of credit facility for financing of construction projects for Gazprom Group and 2012 the above guarantee amounted to RR 8,164 and RR 2,507, respectively. In July 2005 Blue Stream Pipeline Company B.V. (BSPC) refinanced some of the existing liabilities, guaranteed by the Group, by means of repayment of the liabilities to a group of Italian and Japanese banks. For the purpose of this transaction loans in the amount of USD 1,185.3 million were received from Gazstream S.A. The Group guaranteed the above loans and 2011, outstanding amounts of these loans were RR 2,124 and RR 8,225, respectively, which were guaranteed by the Group, pursuant to its obligations. In July 2013 loans issued by Gazstream S.A. were redeemed. In May 2008 the Group provided a guarantee to OAO Bank of Moscow on behalf of OAO Group E4 as a security of loans for obligations under contracts for delivering of power units the above guarantee amounted to RR 1, this credit facility was repaid. Other guarantees include mainly guarantees issued by the Group under equipment purchase or construction and installation works contracts. Legal proceedings The Group is a party to certain legal cases arising in the normal course of business. The management of the Group believes that there are no current legal cases or other claims outstanding, which could have a material negative effect on the result of operations or financial position of the Group. Taxation The tax, currency and customs legislation in the n Federation is subject to varying interpretations and frequent changes. Tax authorities may be taking a more assertive position in their interpretation of the legislation and assessments. Management believes that its interpretation of the relevant legislation as of 2013 and 2012 is appropriate and all of the Group's tax, currency and customs positions will be sustainable. 46

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